guardian.co.uk, Monday 20 December 2010 21.26 GMT BAE has steadfastly argued that it did not make corrupt payments to secure a contract from the Tanzanian government. Photograph: Murdo MacLeod for the Guardian A controversial deal between prosecutors and Britain's biggest arms firm, BAE, was today challenged by a judge who said the company appeared to have been engaged in bribery.
BAE had reached a deal with the Serious Fraud Office earlier this year in which it agreed to plead guilty to a relatively minor accounting offence. BAE steadfastly argued that it did not make corrupt payments to secure a £28m contract from the Tanzanian government.
But today, Mr Justice Bean questioned the heart of the agreement, repeatedly saying that payments originating from the company appeared to be "corrupt" and for "bribing decision-makers in Tanzania". He told Southwark crown court that it appeared that BAE had paid "whatever was necessary to whomever it was necessary" to get the Tanzanian contract. He added that it appeared that the payments were disguised so that BAE "would have no fingerprints on the money". "They just wanted the job done &#8211; hear no evil, see no evil," he said. The judge is due to sentence BAE tomorrow .
In February, BAE struck the plea deal with the SFO and American prosecutors to end years of corruption investigations into its business methods. The arms giant agreed to pay £30m in corporate penalties in return for admitting accounting irregularities over a radar contract with Tanzania. Anti-corruption campaigners have argued that the deal is too lenient and cosy.
Today, Victor Temple, the QC for the SFO, told the court that BAE had set up a system of "covert" and "overt" agents to sell their arms around the world. The "overt" advisers "conducted their work openly as BAE's in-house representatives", he said, while the "covert" agents' work was "highly confidential".
He said Sir Richard Evans, BAE's chairman, had "personally approved" the use of a businessman, Sailesh Vithlani, as its "covert" agent to secure the Tanzanian radar contract. Approval was also given by Mike Turner, then a board member who later became BAE's chief executive.
Temple said BAE paid $12.4m (£7.7m) to Vithlani between 2000 and 2005 &#8211; around a third of the radar contract's value.
BAE had paid much of this money through its front company based in the British Virgin Islands (BVI), known as Red Diamond, to a Panama-based company controlled by Vithlani.
Today the court heard that the SFO and BAE had agreed a series of "carefully- worded" statements to put before the judge. These included:
&#8226; The admission by BAE that "there was a high probability that part of the $12.4m would be used &#8230; to favour BAE" while the contract was being negotiated;
&#8226; "It was not now possible to establish precisely what Vithlani did with the money which was paid to him";
&#8226; That the SFO did not say that any of this money was "in fact improperly used";
&#8226; That the SFO accepted that BAE had not engaged in corruption.
The judge called these statements the "critical part" of the case, repeatedly asking barristers for the SFO and BAE what the money had actually been used for.
He said: "I have to establish what has happened. If there is no money to be used for corrupt practices, why is 97% of it paid through a BVI company controlled by BAE to another [offshore] company controlled by Vithlani?"
When Temple said Vithlani had been hired to lobby for BAE, the judge questioned why the businessman was paid so much for his work.
Temple said that lobbying was legitimate work. "To lobby is one thing, to corrupt another".
Temple added that BAE had committed the accounting offence as Vithlani had been recorded in its books as performing "technical services", but he had no knowledge of any technical matters.
David Perry, QC for BAE, argued that the firm had not admitted any corruption and should only be sentenced for the one offence they had confessed to in the plea bargain.
The judge had threatened to call witnesses to testify as he wanted to established the purpose of the payments, but later decided to go ahead with passing sentence tomorrow.

guardian.co.uk, Monday 20 December 2010 21.26 GMT BAE has steadfastly argued that it did not make corrupt payments to secure a contract from the Tanzanian government. Photograph: Murdo MacLeod for the Guardian A controversial deal between prosecutors and Britain's biggest arms firm, BAE, was today challenged by a judge who said the company appeared to have been engaged in bribery.
BAE had reached a deal with the Serious Fraud Office earlier this year in which it agreed to plead guilty to a relatively minor accounting offence. BAE steadfastly argued that it did not make corrupt payments to secure a £28m contract from the Tanzanian government.
But today, Mr Justice Bean questioned the heart of the agreement, repeatedly saying that payments originating from the company appeared to be "corrupt" and for "bribing decision-makers in Tanzania". He told Southwark crown court that it appeared that BAE had paid "whatever was necessary to whomever it was necessary" to get the Tanzanian contract. He added that it appeared that the payments were disguised so that BAE "would have no fingerprints on the money". "They just wanted the job done  hear no evil, see no evil," he said. The judge is due to sentence BAE tomorrow .
In February, BAE struck the plea deal with the SFO and American prosecutors to end years of corruption investigations into its business methods. The arms giant agreed to pay £30m in corporate penalties in return for admitting accounting irregularities over a radar contract with Tanzania. Anti-corruption campaigners have argued that the deal is too lenient and cosy.
Today, Victor Temple, the QC for the SFO, told the court that BAE had set up a system of "covert" and "overt" agents to sell their arms around the world. The "overt" advisers "conducted their work openly as BAE's in-house representatives", he said, while the "covert" agents' work was "highly confidential".
He said Sir Richard Evans, BAE's chairman, had "personally approved" the use of a businessman, Sailesh Vithlani, as its "covert" agent to secure the Tanzanian radar contract. Approval was also given by Mike Turner, then a board member who later became BAE's chief executive.
Temple said BAE paid $12.4m (£7.7m) to Vithlani between 2000 and 2005  around a third of the radar contract's value.
BAE had paid much of this money through its front company based in the British Virgin Islands (BVI), known as Red Diamond, to a Panama-based company controlled by Vithlani.
Today the court heard that the SFO and BAE had agreed a series of "carefully- worded" statements to put before the judge. These included:
 The admission by BAE that "there was a high probability that part of the $12.4m would be used to favour BAE" while the contract was being negotiated;
 "It was not now possible to establish precisely what Vithlani did with the money which was paid to him";
 That the SFO did not say that any of this money was "in fact improperly used";
 That the SFO accepted that BAE had not engaged in corruption.
The judge called these statements the "critical part" of the case, repeatedly asking barristers for the SFO and BAE what the money had actually been used for.
He said: "I have to establish what has happened. If there is no money to be used for corrupt practices, why is 97% of it paid through a BVI company controlled by BAE to another [offshore] company controlled by Vithlani?"
When Temple said Vithlani had been hired to lobby for BAE, the judge questioned why the businessman was paid so much for his work.
Temple said that lobbying was legitimate work. "To lobby is one thing, to corrupt another".
Temple added that BAE had committed the accounting offence as Vithlani had been recorded in its books as performing "technical services", but he had no knowledge of any technical matters.
David Perry, QC for BAE, argued that the firm had not admitted any corruption and should only be sentenced for the one offence they had confessed to in the plea bargain.
The judge had threatened to call witnesses to testify as he wanted to established the purpose of the payments, but later decided to go ahead with passing sentence tomorrow.

The Guardian, Saturday 6 February 2010 <li class="history">Article history A BAE Eurofighter Typhoon. The SFO has charged a former agent of the arms giant with conspiring to make corrupt payments to promote the sale of its fighter jets. Photograph: Carl De Souza/AFP The following correction was printed in the Guardian's Corrections and clarifications column, Wednesday 17 February 2010
The headline above could have been misinterpreted. What BAE admitted to was false accounting and making misleading statements in relation to allegations of corruption, as we later made clear in other articles. The US deputy attorney general quoted in the article is Gary Grindler, not Larry Grindler.
The arms giant BAE yesterday agreed to pay out almost £300m in penalties, as it finally admitted guilt over its worldwide conduct, in the face of long-running corruption investigations.
For 20 years, the firm refused to accept any wrongdoing, despite mounting evidence of alleged bribes and kickbacks, much of it uncovered by the Guardian.
But BAE yesterday said it would plead guilty to charges of false accounting and making misleading statements, in simultaneous settlement deals with the Serious Fraud Office in the UK and the department of justice in Washington.
The admissions in the US covered BAE's huge £43bn al-Yamamah fighter plane sales to Saudi Arabia and smaller deals in the Czech Republic and elsewhere in central Europe. In the UK, the admissions cover a highly controversial sale of a military radar to poverty-stricken Tanzania, which the development secretary Clare Short said at the time "stank" of corruption, but which the then prime minister, Tony Blair, forced through the cabinet.
The Serious Fraud Office said in its announcement yesterday that some of the £30m penalty BAE was to hand over in the UK would be "an ex gratia payment for the benefit of the people of Tanzania".
Another $400m (£257m) would be paid in penalties to the US authorities. BAE will not face international blacklisting from future contracts, because it has only admitted false accounting, not bribery.
MPs admitted to mixed feelings about BAE's admission and are still furious that the SFO's own extensive inquiry into the al-Yamamah deal was shut down in 2006, following pressure from the firm and from Saudi officials, who reportedly threatened to withdraw co-operation over security matters. The then attorney general, Lord Goldsmith, cited national security when he announced the inquiry was being abandoned. Blair said he took full responsibility for the decision.
The Liberal Democrats' deputy leader, Vince Cable, said last night that BAE *Systems had succeeded in ensuring that key details of its arms deals would remain hidden. "The one positive thing is we have now had an acknowledgement from BAE Systems that unacceptable practices were being conducted. But nobody has been brought to account." He added: "The British government was up to its neck in this whole business. Government ministers were almost certainly fully aware of what was happening."
The former Labour minister Peter *Kilfoyle said: "I certainly think there is now an argument to be made for an *independent judicial inquiry into the whole affair. This raises serious questions on what [Blair's] motivation was in intervening in the [al-Yamamah investigation in the UK] and what influences were brought to bear on him."
Richard Alderman, director of the SFO, called the pioneering deal "pragmatic". It later emerged that the only prosecution of an individual by the SFO &#8211; Count Alfons Mensdorff-Pouilly &#8211; was being dropped. Alderman added: "This brings to an end the SFO's investigations into BAE's defence contracts."
In Washington, the deputy attorney general, Larry Grindler, was more pointed. "Any company conducting business with the US that profits through false statements will be held accountable," he said. "The alleged illegal conduct undermined US efforts to ensure that corruption has no place in international trade."
Britain had previously been subject to condemnation at the OECD after Blair intervened to halt the British investigation into allegations of Saudi corruption.
Yesterday's announcement in Washington focused on BAE's acceptance of guilt of the Saudi deals, and described secret shell offshore companies for making covert payments, and specific payments into a Saudi intermediary's Swiss account. It also identified £19m secretly paid to lubricate Czech and Hungarian weapons deals. BAE admitted writing an untrue letter to US authorities in 2000, denying it was paying any secret commissions.
Yesterday's statement said BAE was now free of threats of corporate prosecution. BAE said the deal "draws a line under the past", and it regretted what it called "the lack of rigor in the past".
A government spokesman said last night: "It's right that these historical allegations have been addressed."
But two anti-corruption campaigners &#8211; Sue Hawley of the Cornerhouse NGO, and the former South African ANC MP Andrew Feinstein &#8211; said they reacted to the deal, under which no trials will take place, with "dismay". They said it "betrays the people of Tanzania, South Africa, the Czech Republic and Romania, who have the right to know the truth about corruption in their countries perpetrated by British and other companies. It &#8230; sends the message that large enough corporations are able to pay their way out of trouble."

The Guardian, Saturday 6 February 2010 <li class="history">Article history A BAE Eurofighter Typhoon. The SFO has charged a former agent of the arms giant with conspiring to make corrupt payments to promote the sale of its fighter jets. Photograph: Carl De Souza/AFP The following correction was printed in the Guardian's Corrections and clarifications column, Wednesday 17 February 2010
The headline above could have been misinterpreted. What BAE admitted to was false accounting and making misleading statements in relation to allegations of corruption, as we later made clear in other articles. The US deputy attorney general quoted in the article is Gary Grindler, not Larry Grindler.
The arms giant BAE yesterday agreed to pay out almost £300m in penalties, as it finally admitted guilt over its worldwide conduct, in the face of long-running corruption investigations.
For 20 years, the firm refused to accept any wrongdoing, despite mounting evidence of alleged bribes and kickbacks, much of it uncovered by the Guardian.
But BAE yesterday said it would plead guilty to charges of false accounting and making misleading statements, in simultaneous settlement deals with the Serious Fraud Office in the UK and the department of justice in Washington.
The admissions in the US covered BAE's huge £43bn al-Yamamah fighter plane sales to Saudi Arabia and smaller deals in the Czech Republic and elsewhere in central Europe. In the UK, the admissions cover a highly controversial sale of a military radar to poverty-stricken Tanzania, which the development secretary Clare Short said at the time "stank" of corruption, but which the then prime minister, Tony Blair, forced through the cabinet.
The Serious Fraud Office said in its announcement yesterday that some of the £30m penalty BAE was to hand over in the UK would be "an ex gratia payment for the benefit of the people of Tanzania".
Another $400m (£257m) would be paid in penalties to the US authorities. BAE will not face international blacklisting from future contracts, because it has only admitted false accounting, not bribery.
MPs admitted to mixed feelings about BAE's admission and are still furious that the SFO's own extensive inquiry into the al-Yamamah deal was shut down in 2006, following pressure from the firm and from Saudi officials, who reportedly threatened to withdraw co-operation over security matters. The then attorney general, Lord Goldsmith, cited national security when he announced the inquiry was being abandoned. Blair said he took full responsibility for the decision.
The Liberal Democrats' deputy leader, Vince Cable, said last night that BAE *Systems had succeeded in ensuring that key details of its arms deals would remain hidden. "The one positive thing is we have now had an acknowledgement from BAE Systems that unacceptable practices were being conducted. But nobody has been brought to account." He added: "The British government was up to its neck in this whole business. Government ministers were almost certainly fully aware of what was happening."
The former Labour minister Peter *Kilfoyle said: "I certainly think there is now an argument to be made for an *independent judicial inquiry into the whole affair. This raises serious questions on what [Blair's] motivation was in intervening in the [al-Yamamah investigation in the UK] and what influences were brought to bear on him."
Richard Alderman, director of the SFO, called the pioneering deal "pragmatic". It later emerged that the only prosecution of an individual by the SFO  Count Alfons Mensdorff-Pouilly  was being dropped. Alderman added: "This brings to an end the SFO's investigations into BAE's defence contracts."
In Washington, the deputy attorney general, Larry Grindler, was more pointed. "Any company conducting business with the US that profits through false statements will be held accountable," he said. "The alleged illegal conduct undermined US efforts to ensure that corruption has no place in international trade."
Britain had previously been subject to condemnation at the OECD after Blair intervened to halt the British investigation into allegations of Saudi corruption.
Yesterday's announcement in Washington focused on BAE's acceptance of guilt of the Saudi deals, and described secret shell offshore companies for making covert payments, and specific payments into a Saudi intermediary's Swiss account. It also identified £19m secretly paid to lubricate Czech and Hungarian weapons deals. BAE admitted writing an untrue letter to US authorities in 2000, denying it was paying any secret commissions.
Yesterday's statement said BAE was now free of threats of corporate prosecution. BAE said the deal "draws a line under the past", and it regretted what it called "the lack of rigor in the past".
A government spokesman said last night: "It's right that these historical allegations have been addressed."
But two anti-corruption campaigners  Sue Hawley of the Cornerhouse NGO, and the former South African ANC MP Andrew Feinstein  said they reacted to the deal, under which no trials will take place, with "dismay". They said it "betrays the people of Tanzania, South Africa, the Czech Republic and Romania, who have the right to know the truth about corruption in their countries perpetrated by British and other companies. It sends the message that large enough corporations are able to pay their way out of trouble."

guardian.co.uk, Friday 5 February 2010 19.26 GMT <li class="history">Article history Prince Bandar, the Saudi royal at the centre of the BAE bribery allegations. Illustration: Martin Argles The Saudi contract called al-Yamamah &#8211; which means "the dove" &#8211; was Britain's largest-ever arms agreement, and the source of intense scrutiny and controversy ever since it was signed in the mid-1980s.
Today &#8211; after years of denying claims of corruption and bribes &#8211; the company finally admitted that the deal was mired in wrongdoing.
The US department of justice today filed a telling indictment to which BAE has agreed to plead guilty.
It says, among other accusations, that BAE "used intermediaries and shell entities to conceal payments to certain advisers who were assisting in the &#8230; [Saudi] fighter deals".
The statement goes on to give examples: "BAE agreed to transfer sums totalling more than £10m and more than $9m to a bank account in Switzerland controlled by an intermediary. BAE was aware that there was a high probability that the intermediary would transfer part of these payments to the [Saudi] official."
To Britain's shame, these admissions have been forced out of BAE, not by the UK's own prosecutors, but those of another country.
The stakes around al-Yamamah were always high. The deal was immensely lucrative for BAE at the time, generating £43bn of revenue and keeping the firm afloat for more than two decades.
It was important enough for the then prime minister, Margaret Thatcher, to be involved in helping to clinch the long-running deal in 1985. And, standing behind the politicians at the signing ceremony, was the smiling Prince Bandar, son of the Saudi defence minister [now crown prince] Sultan.
It was later to become plain how much he had to be pleased about.
The agreement was substantial and involved expensive military hardware.
In the first phase, Britain sold the Saudis 72 Tornado planes, 30 Hawk trainers and 30 other trainer planes. A further batch of 48 Tornados was sold in the second phase of the deal agreed in 1993, and a third tranche, agreed after the end of the Serious Fraud Office investigation, involved the sale of 72 Eurofighter Typhoons.
The Guardian first started its lengthy investigations into BAE back in 2003. The paper obtained evidence that the company was operating a slush fund through front companies to provide substantial treats and favours to Saudi dignitaries.
Whistleblowers came forward to reveal how the arms dealers were spending huge sums to keep the head of the Saudi air force sweet.
But those sums proved relatively small in the grand scale of things. The Guardian discovered that BAE was paying secret sums of money to confidential agents all around the world through a global system of offshore anonymous companies. An undeclared subsidiary called Red Diamond was acting as a vast laundry. A parallel entity called Poseidon made specific Saudi payments.
Or, as the justice department in Washington put it today: "BAE took steps to conceal its relationships with &#8230; advisers and its undisclosed payments to them. For example, BAE contracted with and paid certain of its advisers through various offshore shell entities beneficially owned by BAE. BAE also encouraged certain of its advisers to establish their own offshore shell entities to receive payments while disguising the origins and recipients of such payments."
The justice department states the arms firm operated a deceptive system of parallel overt and covert payments to its agents, who could then use the secret supplies of cash to pay bribes.
"BAE retained and paid the same marketing adviser both using the offshore structure and without using the offshore structure."
In the UK, the SFO launched its own inquiry in 2004. Its investigators started to get close to the Saudi royal family, uncovering evidence of huge sums being paid to Swiss bank accounts linked to middlemen including the well-connected billionaire Wafic Said.
In September 2006, the Swiss were preparing to disclose the bank records to the SFO. The firm and its lobbyists started a public campaign warning that huge numbers of arms-manufacturing jobs could be lost.
Behind the scenes, the Saudis were issuing their own threats. They claimed they would stop supplying vital intelligence about al-Qaida terrorists to Britain if the investigation was allowed to continue. SFO investigators were told dramatically that they faced "another 7/7" and the loss of "British lives on British streets" if they carried on.
It was reported that the Saudis had issued an ultimatum that the inquiry had to be terminated within two weeks, and in December 2006, Lord Goldsmith, then the attorney general, rose in the House of Lords to announce that the investigation had indeed been brought to a halt.
It transpired that Tony Blair had written a "secret and personal" letter to Goldsmith demanding that he stop the investigation.
He hoped for a new arms deal from the Saudis. Plus, he claimed, there was a "real and immediate risk of a collapse in UK/Saudi security, intelligence and diplomatic co-operation".
The prime minister said he "would be failing in his duty" if he had not made his views known.
Inside the SFO, threats were privately discounted, on the grounds they were coming from Prince Bandar himself, a recipient of BAE's largesse.
But that was not the end of the matter. In 2007, the Guardian revealed that the claims the SFO had been investigating included one that BAE had secretly paid more than £1bn to Prince Bandar through a US bank, as well as making him the free gift of an airliner.
The US justice department decided to launch its own investigation. At its heart were claims that BAE had been paying £30m every quarter for at least a decade to the colourful prince.
The US prosecutors could take jurisdiction as the payments had been channelled through a US bank in Washington where Bandar was the Saudi ambassador for 20 years.
The British government refused to hand over documents about the Bandar payments to help the American prosecutors, payments allegedly made with the knowledge and authorisation of Ministry of Defence officials. Ministers had claimed for 20 years that there were no secret commission payments, and BAE officially promised the US government the same in a 2000 official letter which later proved to be its undoing.

guardian.co.uk, Friday 5 February 2010 19.26 GMT <li class="history">Article history Prince Bandar, the Saudi royal at the centre of the BAE bribery allegations. Illustration: Martin Argles The Saudi contract called al-Yamamah  which means "the dove"  was Britain's largest-ever arms agreement, and the source of intense scrutiny and controversy ever since it was signed in the mid-1980s.
Today  after years of denying claims of corruption and bribes  the company finally admitted that the deal was mired in wrongdoing.
The US department of justice today filed a telling indictment to which BAE has agreed to plead guilty.
It says, among other accusations, that BAE "used intermediaries and shell entities to conceal payments to certain advisers who were assisting in the [Saudi] fighter deals".
The statement goes on to give examples: "BAE agreed to transfer sums totalling more than £10m and more than $9m to a bank account in Switzerland controlled by an intermediary. BAE was aware that there was a high probability that the intermediary would transfer part of these payments to the [Saudi] official."
To Britain's shame, these admissions have been forced out of BAE, not by the UK's own prosecutors, but those of another country.
The stakes around al-Yamamah were always high. The deal was immensely lucrative for BAE at the time, generating £43bn of revenue and keeping the firm afloat for more than two decades.
It was important enough for the then prime minister, Margaret Thatcher, to be involved in helping to clinch the long-running deal in 1985. And, standing behind the politicians at the signing ceremony, was the smiling Prince Bandar, son of the Saudi defence minister [now crown prince] Sultan.
It was later to become plain how much he had to be pleased about.
The agreement was substantial and involved expensive military hardware.
In the first phase, Britain sold the Saudis 72 Tornado planes, 30 Hawk trainers and 30 other trainer planes. A further batch of 48 Tornados was sold in the second phase of the deal agreed in 1993, and a third tranche, agreed after the end of the Serious Fraud Office investigation, involved the sale of 72 Eurofighter Typhoons.
The Guardian first started its lengthy investigations into BAE back in 2003. The paper obtained evidence that the company was operating a slush fund through front companies to provide substantial treats and favours to Saudi dignitaries.
Whistleblowers came forward to reveal how the arms dealers were spending huge sums to keep the head of the Saudi air force sweet.
But those sums proved relatively small in the grand scale of things. The Guardian discovered that BAE was paying secret sums of money to confidential agents all around the world through a global system of offshore anonymous companies. An undeclared subsidiary called Red Diamond was acting as a vast laundry. A parallel entity called Poseidon made specific Saudi payments.
Or, as the justice department in Washington put it today: "BAE took steps to conceal its relationships with advisers and its undisclosed payments to them. For example, BAE contracted with and paid certain of its advisers through various offshore shell entities beneficially owned by BAE. BAE also encouraged certain of its advisers to establish their own offshore shell entities to receive payments while disguising the origins and recipients of such payments."
The justice department states the arms firm operated a deceptive system of parallel overt and covert payments to its agents, who could then use the secret supplies of cash to pay bribes.
"BAE retained and paid the same marketing adviser both using the offshore structure and without using the offshore structure."
In the UK, the SFO launched its own inquiry in 2004. Its investigators started to get close to the Saudi royal family, uncovering evidence of huge sums being paid to Swiss bank accounts linked to middlemen including the well-connected billionaire Wafic Said.
In September 2006, the Swiss were preparing to disclose the bank records to the SFO. The firm and its lobbyists started a public campaign warning that huge numbers of arms-manufacturing jobs could be lost.
Behind the scenes, the Saudis were issuing their own threats. They claimed they would stop supplying vital intelligence about al-Qaida terrorists to Britain if the investigation was allowed to continue. SFO investigators were told dramatically that they faced "another 7/7" and the loss of "British lives on British streets" if they carried on.
It was reported that the Saudis had issued an ultimatum that the inquiry had to be terminated within two weeks, and in December 2006, Lord Goldsmith, then the attorney general, rose in the House of Lords to announce that the investigation had indeed been brought to a halt.
It transpired that Tony Blair had written a "secret and personal" letter to Goldsmith demanding that he stop the investigation.
He hoped for a new arms deal from the Saudis. Plus, he claimed, there was a "real and immediate risk of a collapse in UK/Saudi security, intelligence and diplomatic co-operation".
The prime minister said he "would be failing in his duty" if he had not made his views known.
Inside the SFO, threats were privately discounted, on the grounds they were coming from Prince Bandar himself, a recipient of BAE's largesse.
But that was not the end of the matter. In 2007, the Guardian revealed that the claims the SFO had been investigating included one that BAE had secretly paid more than £1bn to Prince Bandar through a US bank, as well as making him the free gift of an airliner.
The US justice department decided to launch its own investigation. At its heart were claims that BAE had been paying £30m every quarter for at least a decade to the colourful prince.
The US prosecutors could take jurisdiction as the payments had been channelled through a US bank in Washington where Bandar was the Saudi ambassador for 20 years.
The British government refused to hand over documents about the Bandar payments to help the American prosecutors, payments allegedly made with the knowledge and authorisation of Ministry of Defence officials. Ministers had claimed for 20 years that there were no secret commission payments, and BAE officially promised the US government the same in a 2000 official letter which later proved to be its undoing.

guardian.co.uk, Tuesday 21 December 2010 15.51 GMT <li class="history">Article history Sir Richard Evans (above), then chairman of BAE, approved the use of a middleman in Tanzania in 2002, said Mr Justice Bean. Photograph: Dan Chung for the Guardian A judge has declared he was "astonished" at claims that BAE Systems, Britain's biggest arms firm, had not acted corruptly when its executives made illicit payments to land an export contract.
Mr Justice Bean said it was "naive in the extreme" to believe that a "shady" middleman who handed out the covert payments was simply a well-paid lobbyist.
The judge concluded that BAE had concealed the payments so that the middleman had free rein to give them "to such people as he thought fit" to secure the contract for the company. BAE did not want to know the details, he added.
His verdict at Southwark crown court today brings to an end long-running attempts to prosecute BAE over bribery allegations in a number of countries. One investigation, into a Saudi arms deal, was terminated by Tony Blair's government.
Today's prosecution centred on a relatively small accounting offence admitted by BAE in relation to one contract in one country &#8211; a £28m radar deal in Tanzania in 2002.
Corruption allegations have swirled around the overpriced radar deal since it was signed in 2001, with former Labour minister Clare Short saying: "It was always obvious that this useless project was corrupt."
Bean pointed out that no individual was prosecuted, even though the payments were deliberately hidden by BAE's executives and the use of the middleman was "personally approved" by its then chairman, Sir Richard Evans.
BAE was brought to court for the single offence after agreeing a plea bargain with the Serious Fraud Office (SFO) to settle years of investigations. The company did so provided that it did not have to admit corruption.
The court heard how BAE had hired the Tanzanian middleman, Sailesh Vithlani, to secure the radar contract and gave him $12.4m (£8m) over five years &#8211; a third of the contract's value.
BAE and the SFO argued in court that Vithlani was being paid to lobby for the contract. But Bean said it was inexplicable that Vithlani received more than $12m and that most of this was channelled via two offshore companies, one in the British Virgin Islands and the other in Panama.
The judge accepted there was no surviving evidence to prove what Vithlani did with the money. "I also accept that there is no evidence that BAE was party to an agreement to corrupt. They did not wish to be and did not need to be," he said. The fact that the money had been paid through the two offshore companies placed BAE "at two or three removes from any shady activity by Mr Vithlani".
He said he could not accept the arguments of BAE and SFO that the former was concealing "merely a series of payments to an expensive lobbyist".
He had raised the possibility of calling witnesses to testify "if it really is the case that legitimate lobbyists could be paid 30% of the value of a $40m contract simply as recompense for their time and trouble".
The judge fined BAE £500,000 for concealing the payments to Vithlani "from the auditors and ultimately the public". He added that there was "moral pressure" on him to keep the fine low, as BAE had agreed in the plea bargain to pay £30m in corporate reparations and fines.
The arms company had said that any fine would be subtracted from that total, with the "balance paid as an ex gratia payment for the benefit of the people of Tanzania".
A sum of £29.5m was now due to be paid to the Tanzanian people &#8211; "the victims of this way of obtaining business", said the judge.
BAE will pay £225,000 for the SFO's legal costs in bringing the prosecution, although the financially-strapped agency had asked for £750,000.
Nicholas Hildyard of anti-corruption campaign the Corner House said: "BAE has been convicted of an accounting misdemeanour that hid a major crime: concealing improper payments. The company will never be able to deny this in future."
Kaye Stearman of the Campaign Against the Arms Trade said: "Today's sentencing is an indictment of BAE's culpability. Whatever the level of the fine, the judge's remarks are damning."
In the same deal to settle the corruption investigations in February, the US government compelled BAE to pay $400m (£260m) in penalties.

guardian.co.uk, Tuesday 21 December 2010 15.51 GMT <li class="history">Article history Sir Richard Evans (above), then chairman of BAE, approved the use of a middleman in Tanzania in 2002, said Mr Justice Bean. Photograph: Dan Chung for the Guardian A judge has declared he was "astonished" at claims that BAE Systems, Britain's biggest arms firm, had not acted corruptly when its executives made illicit payments to land an export contract.
Mr Justice Bean said it was "naive in the extreme" to believe that a "shady" middleman who handed out the covert payments was simply a well-paid lobbyist.
The judge concluded that BAE had concealed the payments so that the middleman had free rein to give them "to such people as he thought fit" to secure the contract for the company. BAE did not want to know the details, he added.
His verdict at Southwark crown court today brings to an end long-running attempts to prosecute BAE over bribery allegations in a number of countries. One investigation, into a Saudi arms deal, was terminated by Tony Blair's government.
Today's prosecution centred on a relatively small accounting offence admitted by BAE in relation to one contract in one country  a £28m radar deal in Tanzania in 2002.
Corruption allegations have swirled around the overpriced radar deal since it was signed in 2001, with former Labour minister Clare Short saying: "It was always obvious that this useless project was corrupt."
Bean pointed out that no individual was prosecuted, even though the payments were deliberately hidden by BAE's executives and the use of the middleman was "personally approved" by its then chairman, Sir Richard Evans.
BAE was brought to court for the single offence after agreeing a plea bargain with the Serious Fraud Office (SFO) to settle years of investigations. The company did so provided that it did not have to admit corruption.
The court heard how BAE had hired the Tanzanian middleman, Sailesh Vithlani, to secure the radar contract and gave him $12.4m (£8m) over five years  a third of the contract's value.
BAE and the SFO argued in court that Vithlani was being paid to lobby for the contract. But Bean said it was inexplicable that Vithlani received more than $12m and that most of this was channelled via two offshore companies, one in the British Virgin Islands and the other in Panama.
The judge accepted there was no surviving evidence to prove what Vithlani did with the money. "I also accept that there is no evidence that BAE was party to an agreement to corrupt. They did not wish to be and did not need to be," he said. The fact that the money had been paid through the two offshore companies placed BAE "at two or three removes from any shady activity by Mr Vithlani".
He said he could not accept the arguments of BAE and SFO that the former was concealing "merely a series of payments to an expensive lobbyist".
He had raised the possibility of calling witnesses to testify "if it really is the case that legitimate lobbyists could be paid 30% of the value of a $40m contract simply as recompense for their time and trouble".
The judge fined BAE £500,000 for concealing the payments to Vithlani "from the auditors and ultimately the public". He added that there was "moral pressure" on him to keep the fine low, as BAE had agreed in the plea bargain to pay £30m in corporate reparations and fines.
The arms company had said that any fine would be subtracted from that total, with the "balance paid as an ex gratia payment for the benefit of the people of Tanzania".
A sum of £29.5m was now due to be paid to the Tanzanian people  "the victims of this way of obtaining business", said the judge.
BAE will pay £225,000 for the SFO's legal costs in bringing the prosecution, although the financially-strapped agency had asked for £750,000.
Nicholas Hildyard of anti-corruption campaign the Corner House said: "BAE has been convicted of an accounting misdemeanour that hid a major crime: concealing improper payments. The company will never be able to deny this in future."
Kaye Stearman of the Campaign Against the Arms Trade said: "Today's sentencing is an indictment of BAE's culpability. Whatever the level of the fine, the judge's remarks are damning."
In the same deal to settle the corruption investigations in February, the US government compelled BAE to pay $400m (£260m) in penalties.

The court heard how BAE had hired the Tanzanian middleman, Sailesh Vithlani, to secure the radar contract and gave him $12.4m (£8m) over five years &#8211; a third of the contract's value.BAE and the SFO argued in court that Vithlani was being paid to lobby for the contract. But Bean said it was inexplicable that Vithlani received more than $12m and that most of this was channelled via two offshore companies, one in the British Virgin Islands and the other in Panama.The judge accepted there was no surviving evidence to prove what Vithlani did with the money. "I also accept that there is no evidence that BAE was party to an agreement to corrupt. They did not wish to be and did not need to be," he said. The fact that the money had been paid through the two offshore companies placed BAE "at two or three removes from any shady activity by Mr Vithlani".He said he could not accept the arguments of BAE and SFO that the former was concealing "merely a series of payments to an expensive lobbyist".He had raised the possibility of calling witnesses to testify "if it really is the case that legitimate lobbyists could be paid 30% of the value of a $40m contract simply as recompense for their time and trouble".The judge fined BAE £500,000 for concealing the payments to Vithlani "from the auditors and ultimately the public". He added that there was "moral pressure" on him to keep the fine low, as BAE had agreed in the plea bargain to pay £30m in corporate reparations and fines.The arms company had said that any fine would be subtracted from that total, with the "balance paid as an ex gratia payment for the benefit of the people of Tanzania".A sum of £29.5m was now due to be paid to the Tanzanian people &#8211; "the victims of this way of obtaining business", said the judge.

The Guardian, Saturday 6 February 2010 <li class="history">Article historyTony Blair was at the centre of controversy over BAE's arms deal with Tanzania, just as he was in the Saudi contracts.Cabinet ministers Claire Short and Robin Cook had tried to stop the sale of the hugely expensive radar to the poverty- stricken Tanzanians. But, as prime minister, he overruled them and insisted that the deal had to go through.It left Cook ruefully muttering that it seemed that Dick Evans, BAE's then chairman, seemed to have "the key to the garden door of No 10".The World Bank and the International Civil Aviation Organisation judged that the 2001 purchase was unnecessary and overpriced.But the £28m deal started to look even worse when the SFO discovered that a third of the contract's price had been diverted into secret offshore bank accounts.The SFO believed that this money was used to pay bribes to Tanzanian politicians and officials.Yesterday Short, who resigned from the government, said : "Every way you looked at it, it [the deal] was outrageous and disgraceful. And guess who absolutely insisted on it going through? My dear friend Tony Blair, who absolutely, adamantly, favoured all proposals for arms deals."It was an obviously corrupt project. Tanzania didn't need a new military air traffic control, it was out-of-date technology, they didn't have any military aircraft &#8211; they needed a civilian air traffic control system and there was a modern, much cheaper one. Everyone talks about good governance in Africa as though it is an African problem, and often the roots of the 'badness' is companies in Europe."In Yesterday's agreement with the SFO, BAE admitted one offence under the 1985 Companies Act relating to the Tanzanian contract.Dick Olver, the chairman, admitted that BAE "made commission payments to a marketing adviser and failed to accurately record such payments in its accounting records ... The company failed to scrutinise these records adequately to ensure that they were reasonably accurate and permitted them to remain uncorrected."The SFO discovered that the money had gone into a Swiss bank account controlled by Sailesh Vithlani, a middleman of Indian extraction with a British passport.He left Tanzania after the country's anti-corruption unit accused of lying to investigators. He is listed as wanted by Interpol.One Tanzanian politician, Andrew Chenge, was forced to resign in 2008 after investigators discovered more than £500,000 in a Jersey bank account he controlled. He denied the money had come from BAE.

The Guardian, Saturday 6 February 2010 <li class="history">Article historyTony Blair was at the centre of controversy over BAE's arms deal with Tanzania, just as he was in the Saudi contracts.Cabinet ministers Claire Short and Robin Cook had tried to stop the sale of the hugely expensive radar to the poverty- stricken Tanzanians. But, as prime minister, he overruled them and insisted that the deal had to go through.It left Cook ruefully muttering that it seemed that Dick Evans, BAE's then chairman, seemed to have "the key to the garden door of No 10".The World Bank and the International Civil Aviation Organisation judged that the 2001 purchase was unnecessary and overpriced.But the £28m deal started to look even worse when the SFO discovered that a third of the contract's price had been diverted into secret offshore bank accounts.The SFO believed that this money was used to pay bribes to Tanzanian politicians and officials.Yesterday Short, who resigned from the government, said : "Every way you looked at it, it [the deal] was outrageous and disgraceful. And guess who absolutely insisted on it going through? My dear friend Tony Blair, who absolutely, adamantly, favoured all proposals for arms deals."It was an obviously corrupt project. Tanzania didn't need a new military air traffic control, it was out-of-date technology, they didn't have any military aircraft  they needed a civilian air traffic control system and there was a modern, much cheaper one. Everyone talks about good governance in Africa as though it is an African problem, and often the roots of the 'badness' is companies in Europe."In Yesterday's agreement with the SFO, BAE admitted one offence under the 1985 Companies Act relating to the Tanzanian contract.Dick Olver, the chairman, admitted that BAE "made commission payments to a marketing adviser and failed to accurately record such payments in its accounting records ... The company failed to scrutinise these records adequately to ensure that they were reasonably accurate and permitted them to remain uncorrected."The SFO discovered that the money had gone into a Swiss bank account controlled by Sailesh Vithlani, a middleman of Indian extraction with a British passport.He left Tanzania after the country's anti-corruption unit accused of lying to investigators. He is listed as wanted by Interpol.One Tanzanian politician, Andrew Chenge, was forced to resign in 2008 after investigators discovered more than £500,000 in a Jersey bank account he controlled. He denied the money had come from BAE.